Pink slips set to become more frequent occurrence

The high dollar hitting our exports and increasingly sophisticated technology will threaten more workers, writes Ian Verrender.

The high dollar hitting our exports and increasingly sophisticated technology will threaten more workers, writes Ian Verrender.

IT BEGAN as a trickle last year. There was the odd announcement detailing cutbacks and job losses at companies such as CSR and SPC before steel maker BlueScope announced massive losses, the closure of a section of its Port Kembla facility and 1000 retrenchments.

Less than six weeks into the new year and the drip, while not quite a deluge, certainly has become far more serious.

A host of corporations, all facing tough trading conditions, have been lining up to deliver the bad news. Manufacturers, led by each of the three car makers, have been labouring under the yoke of a record Australian dollar that has made them uncompetitive.

As the political furore over emergency packages gathered heat, the head of General Motors-Holden confided that governments around the world "support" their automobile industries. Other industries, however, don't seem to engender the same kind of political support.

Aluminium maker Alcoa Australia this week said it may have to close one of its two Victorian plants, at Point Henry, threatening the livelihoods of 600 workers. Again the company cited the strength of the currency along with the distressed state of the global aluminium market.

In between, there has been a steady stream of dire warnings and pink slips from our financial institutions, capped off by Macquarie Group saying this week that it had shed 1000 jobs in the past year with more to come.

While circumstances unique to each company often play a role in these decisions, it is clear forces have begun to take effect that will reshape our economy and roles within it.

The demise of our manufacturing industry is a familiar tale of steady decline and a trend that now appears to be accelerating. But it remains one of the nation's biggest employers of skilled and unskilled labour and each factory closure comes attached with an enormous degree of individual pain that has the potential to spill over into the political arena.

While a stronger currency bequeaths greater wealth upon us all, through increased spending power, it is no real help if you're unemployed.

Up until about 2007, our economy was evolving in a fairly predictable and traditional manner.

In the mid '90s, manufacturing was still the dominant contributor to the economy, accounting for 15 per cent of gross domestic product. But in the decade up until 2007, it declined to 12 per cent and has been shrinking ever since as about 100,000 jobs have evaporated in the past three years.

Nevertheless, according to the latest statistics, just under 1 million Australians are still employed in the sector, with the bulk in New South Wales and Victoria. Those declines were largely offset by the growth in the services sector.

The American experience was far different. Between 2001 and 2010, 42,000 factories closed and 5.5 million manufacturing jobs (about a third of the total) disappeared. There's no prizes for guessing where most went. China.

Those trends now are accelerating as Australia's transition to global quarry gathers pace. And it is no longer simply affecting our manufacturing. Increasingly, more complex service jobs are being sent offshore. That trend will gather pace within the next decade. Once the national broadband network is built, the capacity for Australian business to import skilled services from emerging Asian economies will be limited only by the imagination.

While the capital influx into our resources sector has provided us with windfall gains and lifted our living standards, it also has the power to unleash powerful forces upon Australian society. Given it is highly mechanised, not all those being laid off in manufacturing and services will be absorbed into this new growth sector. And therein lies a challenge for our politicians.

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